Meta and BlackRock announced a venture Tuesday morning to develop and own a data center campus in El Paso, Texas — one gigawatt of compute, roughly $14 billion in total development costs. BlackRock-managed funds, including Global Infrastructure Partners and HPS Investment Partners, take an 80% interest. Meta keeps 20%.
The plumbing, from Meta’s own release: at financial close Meta contributes the land and construction-in-progress assets, valued at about $2.3 billion. BlackRock puts in roughly $4.9 billion of cash, a portion of it funded from a $12.5 billion debt financing. Meta then takes a one-time distribution of about $1 billion to true up the 80/20 split, and leases back the entire campus as sole occupant — a four-year initial term with four options to extend, a potential 20-year run. Capacity starts coming online in 2028.
Read that as a balance sheet rather than a press release. Meta hands over an asset it was already building, collects a billion dollars on the way out the door, and keeps using every watt of it.
The line most people will skip
At the bottom of the financing section sits the sentence that matters. Meta is providing residual value guarantees with an aggregate threshold of approximately $13 billion, decreasing over time. If certain conditions are met within the first 16 years of the lease term, Meta owes the shortfall between the property’s fair value at that point and the guaranteed threshold.
So: someone else owns 80% of the campus, and Meta has promised to make the owners close to whole if the thing turns out to be worth less than expected. Nearly the entire $14 billion of value sits behind a Meta backstop. The title moved. The funding moved. The economic risk largely stayed put.
Our take: Leases are how capital expenditure stops looking like capital expenditure. Meta reports Q2 results Wednesday afternoon into a tape that has spent two weeks punishing AI spending, with full-year 2026 capex guidance already raised to $125–$145 billion from $115–$135 billion. A structure that delivers a gigawatt without adding $14 billion to the capex line, announced the day before that print, is not accidental timing. Price the guarantee, not the ownership percentage.
What BlackRock actually bought
From the other side of the table, this is closer to a bond than a building. BlackRock gets contracted cash flow of up to 20 years from one of the most creditworthy tenants on the planet, secured on a hard asset, with a residual value floor written by that same tenant. The $12.5 billion of debt is not underwriting a data center. It is underwriting Meta.
That is the pattern worth tracking, because it is now the template. Nvidia is reportedly exploring a $250 billion backstop for OpenAI’s Ohio lease. Neoclouds like Applied Digital book enormous revenue against thin rent. Big Tech increasingly does not build compute so much as guarantee compute that private credit builds. The capital arrives from outside the technology sector; the credit risk stays inside it.
What to watch
- Wednesday’s capex line. If guidance holds at $125–$145 billion while gigawatts keep appearing, the gap between the two is the size of the off-balance-sheet program.
- The 10-Q language. Residual value guarantees, variable interest entity treatment, and lease classification decide whether any of this consolidates back onto Meta’s books. That disclosure will be more informative than the press release.
- The next campus. Meta says it chose BlackRock after “a highly competitive process” reflecting a “disciplined approach to diversifying its infrastructure financing.” Diversifying is plural by design.
- El Paso’s side of it. Meta puts its own investment in the site at over $10 billion, with more than 4,000 construction jobs at peak, over 2,300 workers already onsite — and 300 operational jobs once complete. The last number is the one that lasts.
The AI buildout has run out of room on the income statement, so it is moving into the footnotes. That is not fraud and it is not even unusual — utilities, airlines and telecoms have financed hard assets this way for decades. It just means the honest question about Big Tech’s AI spending is no longer “how much capex?” It is “how much exposure?” Those two numbers have started to drift apart across the whole index, and Wednesday’s earnings call is where Meta gets asked to reconcile them.